Manila Books the PEZA Papers. The Cap Table Lives in Singapore.
Filipino founders incorporate offshore and leave the local company to pay taxes here while the equity, IP, and upside settle abroad. CREATE MORE was supposed to keep them home.
A growing number of Filipino founders now register a Singapore holding company first, then treat the Philippine entity as a back office that pays PEZA fees and BIR withholding while the real value sits offshore. The intellectual property gets assigned to the parent. The cap table, the one investors actually buy into, opens in Singapore. Manila keeps the payroll and the compliance calendar.
This is the workaround that regional rounds now assume. Singapore's Tech.Pass lets a founder base themselves there with credibility, and the Variable Capital Company structure gives funds a familiar wrapper for pooling money across borders. When a Series A lead in Jakarta or a fund out of the VCC ecosystem looks at a deal, they want to invest into an entity they can exit cleanly, and a Philippine corporation carries friction they would rather skip.
What CREATE MORE was supposed to do
CREATE MORE, the 2024 update to the earlier CREATE law, sharpened the incentive menu: lower corporate rates for registered enterprises, clearer rules on the enhanced deduction, and a longer runway for export-oriented firms under PEZA and the Board of Investments. The pitch to founders was simple. Keep the operating company here, plug into the incentives, and you get tax relief without leaving.
The gap is that incentives reward operations, not ownership. CREATE MORE can lower the tax on a software team based in Cebu or a fulfillment operation in Laguna, but it does nothing to make a foreign investor prefer a Philippine holding company over a Singapore one. The founder happily keeps the engineers here and takes the PEZA break, then parks the equity where the money wants it. Nobody is breaking a rule.
Who collects, who loses
The Philippine entity still pays. It remits withholding taxes on salaries, settles the local BIR obligations, covers PEZA registration and reporting, and shows up as a cost line on a deck controlled from abroad. The DTI counts the jobs and the compliance, which is real. What it does not count is the capital gain when the company sells, because that gain accrues to shareholders sitting under Singapore law, taxed on Singapore terms.
That is the piece that matters over a decade. A country that hosts the workers but not the owners collects payroll tax on the way up and watches the exit value leave on the way out. When one of these companies gets acquired, the founders' windfall, the fund's return, the reinvestable capital that could seed the next round of local startups, most of it clears through the offshore parent and stays in that orbit.
Advocacy groups tracking Southeast Asian venture flows have flagged this pattern for years, and it is not unique to the Philippines. Singapore built the plumbing on purpose, and Indonesian and Vietnamese founders route through it for the same reasons. But the Philippines is spending on incentives to keep companies it is functionally renting.
The fix is not a bigger PEZA discount. It is making the local holding company a defensible place to keep a cap table: exits that do not punish domestic shareholders, a VCC-equivalent wrapper that funds actually trust, and rules a Jakarta investor can read without hiring a Manila tax lawyer. Until then, the DTI gets the payslips and the filing fees, and Singapore gets the day the founder finally cashes out.
